Profit maximisation occurs when a firm produces at the point where marginal cost equal marginal revenue (MC=MR). This is the point of profit maximisation as any unit produced after this point will have a greater marginal cost than marginal revenue therefore the marginal revenue being gained from the extra unit will decrease total revenue rather than increase it, thus causing profits to decrease. A reason why a firm may want to profit maximise is that it keeps shareholder happy as they receive a greater share of dividends and also if a firm has profits they can reinvest these profits into research and development (dynamic efficiency). There are many different objectives a firm could have other than profit maximisation. The knowledge of a firm finding out where marginal costs equal marginal revenue is very difficult so some firms may not be able to profit maximise as they do not have the correct knowledge required to do so.
The average performance of DFA large company value fund has very small difference with crsp cap decile #1. It is a little lower than S&P 500. It means the portfolio is diversified to eliminate unsystematic risk, but tracking error is also exist.The reason of the tiny difference may be timing or security selection. the tiny difference may be timing or security selection. What conclusions can you draw from all this?
This would also help improve the company’s inventory turnover ratio from 4.7 to the industry average of 6.1. The firm’s debt ratio anticipation of 44.17% is better than the market average and will allow the company to pay down its debt quicker than competitors and have more cash on hand. The extra cash on hand provides more liquidity and is attractive to potential investors. However, these numbers are based on high projections. If such numbers are not reached the company is considered underperforming and makes an unattractive appeal to investors.
Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 5. A self-imposed budget is one prepared by top management and passed downward through an organization. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 6. When using the self-imposed budget approach, it is generally best for top management to accept all budget estimates without question in order to minimize adverse behavioral responses from employees. Ans: False AACSB: Reflective Thinking AICPA BB: Resource Management, Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 7.
Mechanically how is your strategy different than your best strategies in 4a Strategy 6 : Inventory Management in Price Cutoffs = 10 could be improved with a small tweak on the preloaded strategy. The cutoff could be reduced from 10 to say 5-6. Why does the change in 5a work better? With the tweaked strategy 6, the reduced cut-off will ensure that the inventory be cut down quickly when the overnight volatility and order processing costs are relatively high. The bid-ask spread is also a cost to the dealer.
From an accounting prospective, the major problem with the calculations mentioned in the article is determining the rate of return and length of the marketing investment. While the initial value of the “investment”, i.e. marketing expense, can be easily determined, determining the real value after the investment has been made has the potential to be biased without a commonly used measurement. The value of the investment could also fluctuate from year to year based on the companies’ profitability even though marketing had not direct
Question 1 To analyze how Global Sourcing Division - GSD can generate added value to their customers and to the rest of GPV's organization, we suggest to make an internal audit of GSD’s production and delivery process in terms of “Seven wastes of lean management”: 1. Overproduction, which leads to higher inventory costs; 2. Waiting time within the product process; 3. Transport, optimizing logistic can decrease the time-to-market rapidly; 4. Inappropriate processing; 5.
Consequently, only suited to a direct-sale model. As such, may be more costly to market to customers iii. Relatively more vulnerable to supply chain disruptions • Benefits i. Lowers working capital needs, makes it easier to self-finance ii. Leads to beneficial cash conversion cycle iii.
Also, Inditex has less operation expenses than H&M’s. All of these imply that Inditex is able to operate with high net profit margins. When the capital efficiency is considered, Inditex is less efficient in terms of capital than H&M due to some indicators. First is that working capital of H&M is higher than Inditex’s which can calculated by extracting other non-current assets from total assets and found as 2129 for H&M and 2082 for Inditex. Other indicator is ROA which can be calculated by dividing net income to total assets.
Therefore, the company faces to problems with turning assets into cash. Moreover a low ratio of receivables turnover implies the company should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm. As for a low quick ration relatively to a current ratio tells us, that the inventory is high, meaning there are troubles with selling. They, in turn lead to a low profit margin. 2) Calculate the operating cycle.